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PEYTO Exploration _ Development Corp

VIEWS: 4 PAGES: 37

  • pg 1
									       RBC Capital Markets Canadian Energy Conference
Unconventional Energy Resources – “Tight Gas” Panel Discussion
                         May 17, 2006
        Profile

        •    Established - November 1998

        •    Market - PEY.UN, Toronto Stock Exchange

        •    Expertise - Exploration & Development of Long-life Gas Reserves

        •    Core Area of Operations – Sundance & Smoky/Kakwa, located in Alberta’s
             Central Deep Basin

        •    Units Outstanding - Basic & Diluted 103 million
               •NO CONVERTIBLE DEBENTURES OR EXCHANGEABLE SHARES
        •    Monthly Distribution - $0.14/unit/month; since July 2003, the distribution has been
             increased five times from the initial $0.075/unit/month


                                                                                                                         2
Historical Per Unit and Units Outstanding numbers have been adjusted to reflect the May 27, 2005 2:1 stock split   5/17/2006
          Characteristics of the Trust

          •    Low Payout Ratio
                  •   A range between 30-70% of funds from operations. In normal commodity price environments the target is 50%.
                  •   Distributions will be primarily interest & royalty income (75% Taxable in 2005)


          •    Long Reserve Life
                  •   18.9 years proven plus probable, 11.5 years proven developed (December 31, 2005 Reserves)


          •    Low Cost Structure
                  •   operating costs of $1.55 per boe (2005 average)


          •    Low Finding & Development Costs
                  •   2005 Proven developed reserves $13.88 per boe including future development costs


          •    High Proven Recycle Ratio
                  •   3.2 for 2005 including future development costs


          •    Growth Through the Drill Bit
          •    Low G&A with No Management Fees

                                                                                                                                         3
BOE factor - 6 mcf = 1 bbl of oil equivalent                                                                                       5/17/2006
North American Tight Gas Deep Basins




                 Alberta Deep Basin




                                               4

                   Map Courtesy of GTI
                                         5/17/2006
 General Area of Operations Map

                                                From the start, Peyto has focused
                                                it’s efforts exclusively in the Deep
                W6    W5         W4             Basin. Of the five most active
                                                companies in the Deep Basin, we
                                                are the only company that has not
                           Alberta              acquired our way in. The table
                                                below ranks the the top five
                                                companies with respect to new
                                                producing wells in the past 12
PEYTO’S                                         months. The Deep Basin is
Sundance Area                                   considered Alberta’s premier
                                                exploration area for high quality
T 55 R 21W5                                     long life gas reserves.”

                                     Edmonton     Alberta's Deep Basin Activity
                                                         (January 2006)

                                                                    New Wells Brought
                                                                     On Production in
                                                Rank     Company    Last Twelve Months
                                     Calgary     1     Burlington          175
                                                 2     PEYTO               138
                                                 3     CNRL                126
                                                 4     Devon               107
                U.S. Canada Border               5     Talisman             99               5
                                                                                       5/17/2006
Total Return

                250%                                                                           25000%
                                                                                                                       Peyto’s disciplined
                                                                                                                       focus and commitment
                                                                                                                       to tight gas resource
                                                                                                                       development has
                200%                                                                           20000%                  provided tremendous
                                                                                                                       return to unit holders.
                                                                                                                       Clearly, tight gas has
                                                                                                                       been and continues to
                                                                                                                       be a successful
                150%                                                                           15000%                  strategy.
Annual Return




                                                                                                        Total Return
                100%                                                                           10000%




                50%                                                                            5000%




                 0%                                                                            0%
                       Year 1   Year 2   Year 3      Year 4       Year 5     Year 6   Year 7

                                            Annual Return     Total Return


                                                                                                                                                 6
                                                                                                                                           5/17/2006
        Finding & Developing Our Own Production
        A Solid Six Year History
                               0




                                                              Gross Declines                           2000                     2001               2002                    2003                     2004
                            14




                                                              1st Year Decline                         -26%                     -36%               -36%                    -41%                     -43%
                                                              2nd Year Decline                         -19%                     -23%               -16%                    -25%
                                                              3rd Year Decline                         -18%                     -15%               -14%
                                                 0




                                                                                                                                                                                                                                                                                          2006 Drills
                                              12




                                                              4th Year Decline                         -12%                     -10%
             Net Sales (mmcf of gas equivalent)




                                                              5th Year Decline                          -8%
                                       0
                                     10




                                                                                                                                                                                                                                                                     2005 Drills
                             80




                                                                                                                                                                                                                                             2004 Drills
                     60




                                                                                                                                                                                            2003 Drills



                                                                                                                                                            2002 Drills
            40




                                                                                                              2001 Drills
                                 20




                                                                   2000 Drills
                                                     Jul-00

                                                               Oct-00

                                                                        Jan-01

                                                                                 Apr-01

                                                                                            Jul-01

                                                                                                     Oct-01

                                                                                                              Jan-02

                                                                                                                       Apr-02

                                                                                                                                 Jul-02

                                                                                                                                          Oct-02

                                                                                                                                                   Jan-03

                                                                                                                                                               Apr-03

                                                                                                                                                                        Jul-03

                                                                                                                                                                                 Oct-03

                                                                                                                                                                                           Jan-04

                                                                                                                                                                                                      Apr-04

                                                                                                                                                                                                               Jul-04

                                                                                                                                                                                                                        Oct-04

                                                                                                                                                                                                                                 Jan-05

                                                                                                                                                                                                                                          Apr-05

                                                                                                                                                                                                                                                   Jul-05

                                                                                                                                                                                                                                                            Oct-05

                                                                                                                                                                                                                                                                        Jan-06

                                                                                                                                                                                                                                                                                 Apr-06

                                                                                                                                                                                                                                                                                            Jul-06

                                                                                                                                                                                                                                                                                                     Oct-06

                                                                                                                                                                                                                                                                                                              Jan-07
                                        -




                                                                                          Peyto Exploration & Development                                                                 Peyto Energy Trust
                                                                                          Corp.


Note: 6 mcfe ≠ 1 bbl of oil equivalent                                                                                                                                                                                                                                                                                       7
                                                                                                                                                                                                                                                                                                                       5/17/2006
          Monthly Distribution History

                                                    15%                                                                                              $0.15
                                                                “Since we converted to a trust over
                                                                two years ago, we have increased our
                                                                distribution five times. Our model was
                                                                designed to grow our reserves per
            Anualized Distribution/Unit Price (%)




                                                                unit, thus, allowing us to grow our
                                                                distributions per unit over time.”




                                                                                                                                                              Monthly Distribution ($/unit)
                                                    10%



                                                                                                                                                     $0.10



                                                    5%




                                                    0%                                                                                                $0.05
                                                    30-Jun-03                          30-Jun-04                           30-Jun-05            30-Jun-06

                                                                                    Annualized Distribution/Unit Price   Monthly Distribution

                                                                                                                                                                                              8
Historical Per Unit and Units Outstanding numbers have been adjusted to reflect the May 27, 2005 2:1 stock split
                                                                                                                                                                              5/17/2006
Industry Comparison
Foundation, Proven Producing Reserve Life


                                          2005 Year End Proven Producing Reserve Life

             15
                                                                                      Peyto’s singular focus on
                                                                                     developing its own tight gas
                        11.5 yrs                                                reserves has led to the assemblage
                                                                                  of over 545 Bcf of PDP reserves
                                                                                    (over 110 MMBOE including
             10                  Long                                                          liquids)
 Years




                                                                 Average

              5
                                                                                                             Short




         -
                   O




                                               N




                                               N
                                               N




                                               N
                                      TE N
                                      PW N
                            N




                                      PW U N




                                      SH UN




                                      PM N
                                      FE N




                                               N

                                               N
                                      VE N




                                      AV N




                                      BN N




                                      FE N
                                 UN




                                      PG N




                                      ZA N
                                      PG N




                                      BT N
                                           _U
                  YT




                                           _U




                                           _U
                                             U




                                             U
                                             U




                                           _U
                        U




                                             U
                                             U




                                           _U
                                             U




                                            U
                                            U




                                            U




                                            U




                                            U

                                            U
                                            U
                                         T_




                                           _
                                         F_




                                         X_




                                         T_
                       T_



                                         F_

                                         T_




                                          I_




                                         T_




                                         T_



                                         E_
                                F_




                                         E_




                                         P_




                                         N_




                                         L_
                                        AY
                                         N
             PE




                                        AE
                                         R



                                        PG
                                        TE
                   AE



                                     PT
                            ER




                                      EE




                                      D
                                      H




                                      C


                                                                                                                           9
                                                                                                                     5/17/2006
Industry Comparison
Foundation, Proven + Probable Reserve Life


                            2005 Year End Proven + Probable Reserve Life

         20
                                                                        Peyto’s singular focus on
                 18.9 yrs                                             developing its own tight gas
                                                                  reserves has led to the assemblage
                                                                    of over 760 Bcf of P+P reserves
         15                                                           (over 153 MMBOE including
                                                                                 liquids)
 Years




         10



             5



         -




              HT U N

               AE N
             DA U N




             P M UN
             A V UN




              PT N




             P W UN

             PG U N
              AE U N




             CP UN




                     UN
              TE N
              V E UN



              P W UN

             E E UN




             BN U N
              FE N
             E R TO




             S H UN




             P G UN



              Z A UN
              F E UN




              BT N




                     U
                     U




                   _U
                   _U
                    U




                 X_




                  T_
                 R_

                 E_
                 T_



                 T_

                 T_

                 F_

                  I_



                 E_

                 T_
                 F_




                 Y_
                   _




                 F_

                 N_




                 P_




                 T_
                   Y




                 L_
                 E_




                 G
                 N
               PE




                                                                                                            10
                                                                                                       5/17/2006
     Tight Gas
     A Theoretical Review A Simplified Model


                        1 mile                   Resource Assumptions
OGIP=22.6 Bcf                    OGIP=22.3 Bcf        •   4 section block of land
                                                      •   Net pay 15m, 10% porosity, Sw=20%
           Well 1    Well 2
                                                      •   Matrix permeability of 0.035 md
                                                      •   Fault altered permeability of 2 md
                                                      •   Homogeneous sand
                    Fa
                      ult




  OGIP=22.3 Bcf                  OGIP=22.1 Bcf        •   20 000 kPaa original pressure
                                                      •   Total GIP of 89.3 Bcf
                                                      •   Under-developed, only 2 wells



                                                 •   Model Description

                                                      •   12 000 areal grid blocks, 3 layers
                                                      •   Dry gas



                                                                                                    11
                                                                                               5/17/2006
       Tight Gas
       A Theoretical Review




Rate = 5200 mcfd
                                   Rate = 819 mcfd    Rate = 1314 mcfd                    Rate = 300 mcfd
Rec = 0.0% OGIP
                                   Rec = 0.0% OGIP    Rec = 11.5% OGIP                    Rec = 2.4% OGIP
P = 20 000 kPaa
                                   P = 20 000 kPaa    P = 18 400 kPaa                     P = 19 400 kPaa




  P = 20 000                        P = 20 000         P = 19 800                         P = 19 900
  kPaa                              kPaa               kPaa                               kPaa




                    Time = 0                                             Time = 4 yrs



                                                     Rate = 671 mcfd
                                                                                           Rate = 177 mcfd
Rate = 879 mcfd                                      Rec = 77.6% OGIP
                                   Rate = 230 mcfd
                                                                                           Rec = 9.0% OGIP
Rec = 38.1% OGIP                                     P = 13 300 kPaa
                                   Rec = 9.1% OGIP
                                                                                           P = 15 100 kPaa
P = 15 900 kPaa
                                   P = 17 600 kPaa




P = 19 100                                               P = 17 600                        P = 17 100
                                    P = 19 000
kPaa                                                     kPaa                              kPaa
                                    kPaa
                                                                                                             12
                                                                                                       5/17/2006
                   Time = 20 yrs                                          Time = 50 yrs
Tight Gas
A Theoretical Review


                                                     Flush rate of 3 to 5
       10000                                         MMcfd dropping to
                                                                                                                    Year 20
                                                     1.5 MMcfd by yr 2
                                                                                                                    879 Mcfd


        1000
Mcfd




        100                                                                                                                                             Year 20
                                                            Flush rate of 800 Mcfd                                                                      230 Mcfd
                                                            dropping to 330 Mcfd by yr 2

                                                                                                                                                                                                        Well 2 -Matrix
         10
                                                                                                                                                                                                        Well 1 - Fault


          1
                                                                                Jan-20
                                                                                         Jan-22
                                                                                                  Jan-24
                                                                                                           Jan-26
                                                                                                                    Jan-28
                                                                                                                             Jan-30
                                                                                                                                      Jan-32
                                                                                                                                               Jan-34
                                                                                                                                                          Jan-36
                                                                                                                                                                   Jan-38
                                                                                                                                                                            Jan-40




                                                                                                                                                                                                                         Jan-50
                                                                                                                                                                                                                                  Jan-52
                                                                                                                                                                                     Jan-42
               Jan-06
                        Jan-08
                                 Jan-10
                                          Jan-12
                                                   Jan-14
                                                              Jan-16
                                                                       Jan-18




                                                                                                                                                                                              Jan-44
                                                                                                                                                                                                       Jan-46
                                                                                                                                                                                                                Jan-48
                                                                                                                                                                                                                                                13
                                                                                                                                                                                                                                           5/17/2006
    Sustainability

•   Sustainability in an energy trust is the condition achieved when the
    company’s business allows it to distribute regular cash disbursements and
    simultaneously reinvest to grow and perpetuate on a per unit basis.

•   Most energy trusts were not designed to be sustainable. Most were
    founded as “harvest” or blow down entities created to maximize unit holder
    value through a more tax efficient capital structure and committed to a more
    disciplined capital investment philosophy.

•   Peyto Energy Trust was borne out of a highly successful predecessor E&P
    company with a disciplined, focused exploration and development strategy.
    The strategy allowed Peyto to reorganize itself as the first sustainable trust
    in the sector.




                                                                                   14
                                                                              5/17/2006
    Ingredients to Sustainability


•   A Suitable Resource – Tight Gas

•   High Netback

•   Ability to Reinvest Efficiently

•   Achievement of Per Share (Unit) Growth




                                                  15
                                             5/17/2006
    Ingredients to Sustainability
    A Suitable Resource – Tight Gas



•   Areally Extensive

•   Multiple Vertical (Stacked) Targets

•   High Volumetric Storage Capacity in Reservoirs

•   Repeatable Well Opportunities

•   Proven Analogues

•   Robust Economics

                                                          16
                                                     5/17/2006
A Suitable Resource
Multiple Vertical Targets

                            Sundance Area Reservoirs




                                                            17
                                                       5/17/2006
    A Suitable Resource
    Volumetric Storage Capacity in Reservoirs

                               Deep Basin Cardium                                              Eastern AB Mannville



                                                                                 h =4m
                                                                              Por = 25%
                                                                               Swi = 30%                                 d = 800 m
                                                                              Pi = 6 MPaa
                                                                               Tr = 30 oC



   h =11m
  Por = 9%
  Swi = 18%
Pi = 19 MPaa                                                      d=2200m
 Tr = 78 oC




               OGIP (94 acres) =    2.0 Bcf (3.6 Bcf on 160 acres)                          OGIP (160 acres) = 0.9 Bcf
                    R/F =          80%                                                            R/F =       85%
                     Ult =         1.6 Bcf                                                        Ult =       0.8 Bcf
                     IP =          570 Mcfd initial (100 boed with liquids)                        IP =       1 MMcfd
                                   325 Mcfd stable (60 boed with liquids)
                     RLI =         14.3 yrs                                                       RLI =       2.2 yrs
                 a.e.d (yr 2+) =   7% / yr                                                       a.e.d  =     36% / yr

                                                                                                                              18
                                                                                                                         5/17/2006
        Reserves
        Long Life vs. Short Life



                                                                        Long Life Production
1,600                                                                   • Typically deeper reservoirs, with large definable areas and
             Short Life – Water Drive                                     no associated water.
                                            “Peyto has been
1,400                                       engineered around           • Production profile is predictable and flattens over time.
                                            Long Life Reserves.”        • Long Life reserves tend to be under estimated early in the
                                                                          production life.
1,200

1,000
                                                                        Short Life Production
 Rate




                                                                        • Typically shallow reservoirs, with small drainage areas and
 800                                                                      associated water.
                                           Long Life
                                                                        • Production profile is defined by a steep decline that is hard to
 600                                                                      predict.
                                                                        • Smaller companies target these reserves for quick growth
                                                                          due to low capital costs and high initial deliverability.
 400
                                                                        • These assets also tend to be the most over valued by the
                              Short Life - Depletion                      market allowing companies to issue equity at a premium to
 200                                                                      asset value.
                                                                        • Responsible for the treadmill effect that prohibits most junior
                                                                          companies from graduating to the next level.
  -
         0        5          10 Time 15                20          25
                                                                                                                                        19
                                                                                                                                  5/17/2006
                                     A Suitable Resource
                                     Repeatable Well Opportunities


                                                               Cardium Wells

                                      9.0



                                      8.0



                                      7.0
Initial Recoverable per Well (Bcf)




                                      6.0



                                      5.0



                                      4.0
                                                                               Average = 1.6 Bcf/well

                                      3.0



                                      2.0



                                      1.0



                                      0.0


                                                                     Well
                                                                                                             20
                                                                                                        5/17/2006
          A Suitable Resource
          Proven Analogues – Greater Edson Area Trend



                                                      Cardium Gas
                                                         Low Risk Development Play
                                                         Liquid Rich, High Heating Value Gas
                                                         Predictable Production Profile
                                                         Long Life Reserves

                                                                                                                                  1
                                                      Cardium Gas Producers On production before 1991
                                                         32 wells on production before 1991
                                                         32 wells still producing today
                                                         No Cardium Wells on the trend have depleted
                                                         Year 1 Avg. Rate 177 boe/d (6:1)
                                                         Current Avg. Rate 59 boe/d (after 18 years of production)
                                                         Cumulative Gas & NGL’s Produced to Date 738,000 boe’s per well
                                                         (70% Gas, 30% NGL’s).
                                                         Decline 6%/year per well
                                                         Ultimate Recoverable Gas & NGL’s 1,092,000 boe’s per well (70% Gas,
                                                         30% NGL’s)
                                                         Ultimate Reserve Life Index 21 years per well (based on Year 1 Average
                                                         rate)

                                               “The Old Analog Cardium Producers have already produced
                                               the equivalent of 13 times their first year’s production. All of
                                               these producers are still producing. The analog’s have an
                 Cardium Gas Producers         ultimate reserve life greater then 20 years.”                                      21
BOE factor - 6 mcf = 1 bbl of oil equivalent                                                                             5/17/2006
          A Suitable Resource
          Proven Analogues – Greater Edson Area Trend

                                                                                                                                                                                      RLI
                                                                                                  Reserve Life                                                                     Based on
                                                                                              Index based on                                                                        Current
                                                                             Gas       First   first Year Rate    2005                                                   Ultimate Rate and
                                                                          Produced   Year Avg and Cum Gas        Current    Time On Exponential Remaining    Ultimate    Reserve Remainin
                                               On Prod      Last Prod      To Date   Gas Rate   Produced TD       Rate     Productio Decline Rate Rec. Raw  Rec. Raw    Life Index    g
                    Well ID        Prd Form     Date          Date         (mmcf)     (mcf/d)        (yrs)       (mcf/d)     n (yrs)   (%/year) Gas (mmcf) Gas (mmcf)      (yrs)   Reserves
           00/15-14-049-18W5/0     Cardium       1-Nov-86     30-Jun-05      8,899      2,936                8       612        19         -8%      2,660      11,559         11        12
           00/14-14-053-20W5/0     Cardium       1-Jan-83     30-Jun-05      9,935      2,637               10       178        23        -12%        543      10,477         11         8
           00/16-29-054-21W5/0     Cardium       1-Apr-88     30-Jun-05      7,105      2,358                8       683        17         -7%      3,472      10,577         12        14
           00/11-13-049-18W5/0     Cardium       1-Oct-86     30-Jun-05      5,731      1,720                9       274        19        -10%      1,021       6,752         11        10
           00/11-12-049-18W5/0     Cardium       1-May-89     30-Jun-05      5,077      1,689                8       504        16         -7%      2,461       7,537         12        13
           02/07-27-051-19W5/0     Cardium       1-Mar-89     30-Jun-05      5,634      1,362               11       413        16         -7%      2,065       7,699         15        14
           00/04-24-051-19W5/0     Cardium       1-Mar-90     30-Jun-05      3,945      1,358                8       452        15         -7%      2,301       6,246         13        14
           00/16-07-049-17W5/0     Cardium       1-Jun-87     30-Jun-05      4,438      1,009               12       289        18         -7%      1,526       5,965         16        14
           00/11-11-053-20W5/0     Cardium       1-Jan-83     30-Jun-05      5,778      1,000               16       420        23         -4%      3,066       8,844         24        20
           00/07-05-050-18W5/0     Cardium       1-Dec-87     30-Jun-05      2,871        899                9       180        18         -9%        719       3,589         11        11
           00/06-24-049-18W5/0     Cardium       1-Jan-88     30-Jun-05      3,601        797               12       217        18         -7%      1,066       4,667         16        13
           00/11-31-052-19W5/2     Cardium       1-Feb-85     30-Jun-05      5,227        795               18       386        20         -4%      2,818       8,045         28        20
           00/11-12-053-20W5/2     Cardium       1-Feb-89     30-Jun-05      3,810        784               13       154        16        -10%        567       4,377         15        10
           00/10-22-049-18W5/0     Cardium       1-Apr-87     30-Jun-05      4,320        745               16       464        18         -3%      3,387       7,707         28        20
           00/16-22-051-19W5/0     Cardium       1-Sep-90     30-Jun-05      1,896        721                7       178        15         -9%        689       2,585         10        11
           00/05-16-052-19W5/2     Cardium       1-Dec-85     30-Jun-05      3,474        699               14       416        20         -3%      3,037       6,511         26        20
           00/06-23-049-18W5/0     Cardium       1-Mar-87     30-Jun-05      4,888        685               20       394        18         -3%      2,876       7,764         31        20
           00/07-30-052-19W5/0     Cardium       1-Jan-83     30-Jun-05      2,359        623               10        71        23        -10%        269       2,628         12        10
           00/03-34-051-19W5/0     Cardium       1-Sep-90     30-Jun-05      1,508        553                7       157        15         -8%        675       2,183         11        12
           00/06-22-054-21W5/2     Cardium       1-Feb-89     30-Jun-05      2,554        545               13       261        16         -4%      1,905       4,459         22        20
           02/10-33-051-19W5/0     Cardium       1-Mar-89     30-Jun-05      1,921        528               10       266        16         -4%      1,942       3,863         20        20
           00/11-08-052-19W5/0     Cardium       1-Dec-85     30-Jun-05      2,108        514               11       171        20         -6%      1,111       3,219         17        18
           00/06-01-053-20W5/3     Cardium       1-Sep-89     30-Jun-05      2,483        420               16       343        16         -1%      2,504       4,987         33        20
           00/06-18-049-17W5/0     Cardium       1-Nov-86     30-Jun-05      5,189        419               34       243        19         -3%      1,774       6,963         46        20
           00/07-36-052-20W5/0     Cardium       1-Oct-86     30-Jun-05      1,611        330               13       113        19         -6%        722       2,333         19        18
           00/08-24-052-20W5/0     Cardium       1-Dec-82     30-Jun-05      1,200        276               12       129        23         -3%        942       2,142         21        20
           00/10-18-052-19W5/2     Cardium       1-Dec-85     30-Jun-05      1,773        269               18       213        20         -1%      1,555       3,328         34        20
           00/14-23-051-19W5/0     Cardium       1-Sep-90     30-Jun-05        681        253                7        85        15         -7%        422       1,103         12        14
           00/07-25-052-20W5/0     Cardium       1-May-83     30-Jun-05        942        222               12        85        22         -4%        621       1,563         19        20
           00/09-13-052-20W5/2     Cardium       1-Jun-87     30-Jun-05      1,638        209               21       331        18          3%      2,416       4,054         53        20
           00/06-23-052-20W5/3     Cardium       1-Feb-86     30-Jun-05        833        103               22       104        19          0%        759       1,592         42        20
           00/12-13-054-21W5/2     Cardium       1-Feb-89     30-Jun-05        600         72               23        60        16         -1%        438       1,038         39        20
           Total                                                           114,028     27,530                      8,846                           52,328     166,356
           Average                                                           3,563        860               13       276        18         -5%      1,635       5,199         22        16
                                                                                                                                                                                              22
BOE factor - 6 mcf = 1 bbl of oil equivalent                                                                                                                                             5/17/2006
A Suitable Resource
Robust Project Economics – A Look Back at Price



                         Historical AECO Gas Price ($/GJ)
                        Historical AECO Monthly Gas Price ($/GJ)

$14.00
         $/GJ x1.055GJ/MMbtu = $/MMbtu
$12.00    1 Mcf Peyto gas = 1.12 MMbtu
                                                              A “New Era” for Gas
          Peyto gas ($/Mcf) = 1.18 x $/GJ
$10.00


 $8.00


 $6.00


 $4.00


 $2.00


 $0.00
     90

     91

     92

     93

     94

     95

     96

     97

     98

     99

     00

     01

     02

     03

     04

     05

     06
  19

  19

  19

  19

  19

  19

  19

  19

  19

  19

  20

  20

  20

  20

  20

  20

  20
                                                                                         23
                                                                                    5/17/2006
   A Suitable Resource
   Robust Project Economics



Assumptions                                          Results (BT)

Well Investment:
        Drill/Complete         $1.6MM                           Scenario 1             Scenario 2
        Tie In                 $0.2MM                        Gas Price $3.00/GJ     Gas Price $8.50/GJ
                                                             (less 0.13/MCF Nova)   (less 0.13/MCF Nova)
Reserve:                                                       $20 US/bbl oil         $70 US/bbl oil
       1.6 Bcf raw gas (Note: Yr 20 Cum =0.9 bcf)

Rate:                                               ROR            10.9%                  73.8%
        570 Mcfd raw (avg Mo 1 Cardium 2005)
        (Superharmonic decline)                     NPV0          4.2 MM$               20.9 MM$

Operating Costs:                                    NPV8          0.4 MM$                5.3 MM$
       $2000/w/mo + $0.15/Mcf (2.5% inflation)
                                                     PIR8        0.2 M$/M$             2.98 M$/M$
Shrinkage/Yields:                                   Payout         8.0 yrs                1.7 yrs
       14% (plus 1% Nova)
       Residue gas 41.5 GJ/103m3 (1114 btu/scf)
       20 bbl/ MMcf LPG
       23 bbl/ MMcf Condensate




                                                                                                                24
                                                                                                           5/17/2006
A Suitable Resource
Robust Project Economics

                                                       Production Forecast

              1000
                            Yr 1 = 47% decline

                              Yr 2 = 26% decline
                                                   Yr 10+ = 5% decline
   M fd raw




              100
                                 Yr 3 = 5-9% decline
    c




                10
                      0      5          10             15        20          25        30   35           40             45               50
                                                 Cumulative Cash Position

              25.00
                                                                                                                                               M
                                                                                                                                      $20.9M
              20.00                                                                                                          c, Cum
                                                                                                                   rice Es
                                                                                                     C.F.,   2.5% P
              15.00                                                                         Undisc
                                                                                                                                 m $1   1.7MM
                                                                                                                 Flat Prices, Cu
                          Payout = 1.7 yrs                                                       Undisc C.F.,
              10.00
                                                                                                                                           MM
                                                                                                                    Price Esc, Cum $5.3
 $MM




                                                                                            8% Disc C.F. , 2.5%
               5.00
                                                                                                                                Cum $4.0 MM
                                                                                                 8% Disc C.F. ,Flat Prices,
               0.00
                      0                                                           25
              -5.00


                                                                                                                                                        25
                                                                                                                                                   5/17/2006
    Ingredients to Sustainability
    High Netback



•     Quality Resource with High Price Realization
      (Liquids rich, high energy content gas)


•     Low Cost Structure
      (Geographical focus with infrastructure strength)


•     High Resultant Unit Netback ($/boe)




                                                               26
                                                          5/17/2006
   High Netback
   Quality Resource with High Unit Price Realization


                                                      Q4 2005 Revenue Before Hedging ($/boe)


                 $75                           $73.30/boe
                                                                                                  Peyto’s focus on
                                                                                               sweet, liquids rich gas
                 $70                                                                     provides excellent price realization,
                                                                                               a key to high netbacks.
                 $65

                 $60
         $/boe




                 $55

                 $50

                 $45

                 $40




                  CP UN
                   PW N




                  AV UN




                  PM N

                  HT N
                   FE N
                   FE N




                  ER N




                  DA N




                  BN N
                   AE N




                  BT N
                  SH N

                  AE N
                  PG N




                   PT N




                  PG N




                        UN
                  VE N
                   TE O




                  ZA N




                  PW N
                   EE N
                        U




                        U

                        U
                       _U
                        U




                        U




                        U




                        U
                        U




                        U
                        U




                        U
                        U

                        U
                        U




                        U
                        U




                        U
                      _U
                      YT




                     E_




                     F_




                     P_

                      T_
                     T_
                     T_




                     F_




                      I_




                     T_
                     F_




                     E_
                     X_

                     N_
                     L_




                     T_




                     T_




                     E_
                     R_
                    Y_




                    N_



                     G
                   PE




Oil & Gas Revenue per boe is before hedging.                                                                                          27
                                                                                                                                 5/17/2006
    High Netback
    Low Cost Structure


                                                                    Q4 2005 Operating Costs

                  14.00
                                           Peyto’s focus on
                  12.00              concentrated core areas with
                                 infrastructure strength provides low
                                 operating costs, another key to high
                  10.00                        netbacks.


                   8.00
          $/boe




                   6.00


$2.65/boe with     4.00
     gas
transportation
                   2.00


                   0.00
                    AE U N




                    PT U N
                    ZA UN




                    AV UN




                    PW U N
                    ER UN




                    EE UN




                    PG UN
                    FE U N
                    PM U N
                    FE UN




                    BN UN




                    CP UN
                    PG UN




                     TE N




                    HT N



                    DA UN
                    S H TO




                    VE N



                    PW N




                      AE N




                    BT UN


                          UN
                           U
                          U




                         _U




                          U
                          U
                       X_




                       T_
                       R_




                       E_
                         _
                       T_




                       T_




                       T_



                        I_




                       F_



                       E_
                       T_
                       F_
                       N_




                       T_

                       P_




                       Y_



                       F_
                        Y




                         _




                       L_
                       E_




                       G
                       N
                      PE




 Operating Costs include Transportation costs. Peyto has always included transportation costs as part of its operating        28
 costs.
                                                                                                                         5/17/2006
High Netback

                                                                                                         2005 Netback ($/boe)
$ 4 0 .0 0                                     $36.54/boe



$ 3 5 .0 0



$ 3 0 .0 0



$ 2 5 .0 0



$ 2 0 .0 0



$ 1 5 .0 0



$ 1 0 .0 0



 $ 5 .0 0



 $ 0 .0 0
                                                                 N




                                                                                                                                                                                                                                        N
                              N




                                                                                                                           N




                                                                                                                                                                                                               N


                                                                                                                                                                                                                            N




                                                                                                                                                                                                                                                          N
                                                                                        N




                                                                                                                                       N




                                                                                                                                                                N


                                                                                                                                                                            N


                                                                                                                                                                                        N
                                           N



                                                     N




                                                                              N




                                                                                                     N


                                                                                                              N




                                                                                                                                                   N




                                                                                                                                                                                                                                                                   N


                                                                                                                                                                                                                                                                             N
                                                                                                                                                                                                     N
                 TO




                                                                                                                                                                                                                                                 N
                                                             _U
                          _U




                                                                                                                       U




                                                                                                                                                                                                              _U



                                                                                                                                                                                                                        U
                                                                                                                                                            U




                                                                                                                                                                                                                                    _U




                                                                                                                                                                                                                                                         _U
                                                                                                                                   _U




                                                                                                                                                                        _U


                                                                                                                                                                                    _U
                                                    U




                                                                                                                                                                                                                                                                  _U



                                                                                                                                                                                                                                                                            U
                                                                          U


                                                                                       U


                                                                                                 U


                                                                                                             _U




                                                                                                                                               _U
                                       U




                                                                                                                                                                                                 U




                                                                                                                                                                                                                                                _U
                                                                                                                      T_




                                                                                                                                                                                                                       F_
                                                T_




                                                                                                                                                                                                                                                                        T_
                                                                                                                                                           F_
                                                                                   L_
             Y




                                      T_




                                                                         T_




                                                                                                T_




                                                                                                                                                                                                I_
                                                             X
                          N




                                                                                                                                                                                                                                    G
                                                                                                                                                                                                          R




                                                                                                                                                                                                                                                     TE
                                                                                                         TF




                                                                                                                                                                        Y


                                                                                                                                                                                    P
                                                                                                                                   N




                                                                                                                                                                                                                                                              TE
                                                                                                                                               E




                                                                                                                                                                                                                                            E
             E




                                                                                                                                                                                            W
                                                                                  FE




                                                                                                                  M




                                                                                                                                                                                                                   R
                                                                                                                                                       G




                                                                                                                                                                                                                                                                       TE
                                               FE




                                                                     E




                                                                                            E
                                                         G
                                  W




                                                                                                                                                                    A


                                                                                                                                                                                N
                                                                                                                                           E
                      H




                                                                                                                                                                                                         ZA
                                                                                                                               V




                                                                                                                                                                                                                                            A
                                                                                                                                                                                                                                P
         P




                                                                                                         P




                                                                                                                                                                                            P




                                                                                                                                                                                                                                                     H
                                                                     A




                                                                                            V




                                                                                                                                                                                                                                                              B
                                                                                                                                                                    D




                                                                                                                                                                                                                   E
                                                                                                                                           E
                                                                                                                               A




                                                                                                                                                       P




                                                                                                                                                                                B
                                                         P
                      S




                                                                                                                  P




                                                                                                                                                                                                                                C
                                                                                                                                                                                                                                                                                 29
                                  P




                                                                                                                                                                                                                                                                        5/17/2006
    Ingredients to Sustainability
    Ability to Reinvest Efficiently



•       Low FD&A Costs
        (Drill repeatable low risk prospects)


•       Leading Recycle Ratio


•       A Depth of Resource Opportunities




                                                     30
                                                5/17/2006
                                              $/boe
                   AE




                            0
                                5
                                    10
                                         15
                                              20
                                                         25
                                                                30
                                                                     35
                                                                          40
                                                                               45
                      _
                 BT UN
                    E_
                 PG UN
                    X_
                 BN UN
                    P_
                       U
                   PE N
                 PG YTO
                    F_
                                                                                                                    Low FD&A Costs




                 AE UN
                    T_




                                                   $14.34/boe
                 HT UN
                    E_
                 AV UN
                    N_
                 DA UN
                    Y
                 PW _UN
                    T_
                 ZA UN
                    R_
                 VE UN
                    T_
                 FE UN
                    T_
                                                                                                                                     Ability to Reinvest Efficiently




                  PW UN
                     I_
                                                                                    Proven Producing FD&A ($/boe)




                 ER UN
                    F_
                       U
                  FE N
                    L_
                 SH UN
                    N_
                 EE UN
                    E
                 PM _UN
                    T_
                 C P UN
                    G_
                 PT UN
                    F_
                 T E UN
                    T_
                       UN
            31
5/17/2006
                 PG




                             0.0
                                   0.5
                                         1.0
                                               1.5
                                                     2.0
                                                           2.5
                                                                    3.0
                    X_
                        U
                   PE N
                       YT
                   AE O
                 B N _U N
                                                                                                                   Recycle Ratio



                    P_
                 AE UN
                    T
                 PG _UN
                    F
                 PW _UN
                    T
                                                                 Ratio 2.5




                 A V _U N
                    N_
                 VE UN
                    T
                 D A _UN
                    Y_
                 BT UN
                    E
                 Z A _UN
                    R_
                 FE UN
                    T_
                                                                                                                                   Ability to Reinvest Efficiently




                 HT UN
                    E_
                  PW U N
                      I_
                                                                             2005 Proven Producing Recycle Ratio




                  FE UN
                     L
                 SH _UN
                    N_
                 ER U N
                    F
                 PM _U N
                    T_
                 EE U N
                    E
                 PT _U N
                    F
                 C P _U N
                    G_
                 T E UN
                    T_
                        UN
            32
5/17/2006
Ability to Reinvest Efficiently
Effective Recycle Ratio


                    2005 Effective Recycle Ratio, Proven Producing

  3
             Effective                     “Effective Recycle Ratio” scales the
             Ratio 2.9                       conventional recycle ratio by the
                                                fraction of cash flow that is
                                                         reinvested.

  2




  1




  0



          FE N
                  N




         PW N




         PT N
         PG N




         AV N
         PG N

         VE N




         BN N




         FE N




         PM N




                 N
         EE N
                 N




                 N




         ZA N




         SH N




                 N
                 N




                 N
         ER N
     O




              _U
              _U




              _U




                U
              _U




              _U
              _U

              _U




                U




                U




              _U
               U




               U




               U




               U




               U
              _U




               U
               U




               U
               U
  YT




            E_
            L_




             I_

            T_
            T_




            T_




            E_




            T_




            F_
            F_




            F_
            T_
            N




            N
            P

           TE




            R
            X




           PG
           AY




           AE
 PE




          PW
      AE




         BT
         H
         D




         C
 -1


                                                                                       33
                                                                                  5/17/2006
    Ingredients to Sustainability
    Achievement of Per Share (Unit) Growth



•      Per Unit Production and Income Growth


•      Per Unit Reserves growth




                                                    34
                                               5/17/2006
          Achievement of Growth
          Per Unit Production and Income Growth

                                                                                                                          218 boed
                                             250                                                                          per million                    1.0
                                                                                                                            units
           Daily Production (boe/d/million




                                                                                                                                                                 Funds from Operations ($/unit)
                                             200                                                                                                         0.8




                                                                                                                                                                    Reserves (boe/unit) &
                                                                                                                                        Quarterly
                                             150                                                                                                         0.6
                                                                                                                                         funds of
                       units)




                                                                                                                                        $0.84/unit


                                             100                                                                                                         0.4



                                              50                                                                                                         0.2



                                             -                                                                                                           -

                                                        Q4 99          Q4 00        Q4 01        Q4 02         Q4 03         Q4 04           Q4 05
                                                                                                Quarter

                                                   Funds from Operations per unit    Proved Producing Reserves per unit     Daily Production per million units



Historical Per Unit and Units Outstanding numbers have been adjusted to reflect the May 27, 2005 2:1 stock split                                                                                  35
BOE factor - 6 mcf = 1 bbl of oil equivalent                                                                                                                                                5/17/2006
                                             AE




                 -25%
                        -20%
                               -15%
                                      -10%
                                               -5%
                                                          0%
                                                               5%
                                                                    10%
                                                                          15%
                                                                                20%
                                                T_
                                                   U
                                                     N
                                              PE
                                                 YT
                                                     O
                                             VE
                                                T_
                                                   U
                                             D       N
                                               AY
                                                  _U
                                                     N
                                               AE
                                                  _U
                                             BN N
                                                P
                                                  _U
                                              FE N
                                                L_
                                                    U
                                             ZA N
                                                R
                                                  _U
                                             PG N
                                                X
                                                                                                                            Per Unit Reserves Growth




                                                  _U
                                             PG N
                                                F_
                                                   U
                                             PW N
                                                T_
                                                   U
                                                                                                                                                       Achievement of Growth




                                             FE N
                                                T_
                                                   U
                                             PT N
                                                F_
                                                   U
                                             H       N
                                               TE
                                                  _U
                                             ER N
                                                F_
                                                   U
                                             BT N
                                                E_
                                                                                      2005 Proven Reserve Growth Per Unit




                                                   U
                                             SH N
                                                N
                                                  _U
                                              PW N
                                                 I_
                                                    U
                                             C       N
                                               PG
                                                  _U
                                             AV N
                                                N
                                                  _U
                                             PM N
                                                T_
                                                   U
                                             EE N
                                                E_
                                                    U
                                                      N
            36
5/17/2006
          Industry Comparison
          Sustainability, Reserve Replacement Cycle


                                                Q4 2005 Proven Producing Reserve Replacement Cycle

                    15
                                                                                                   Funds from Operations ($/boe)            $42.32
                                                                                                   Minus Distributions @ 46% ($/boe)       ($17.97)
                                                                                                   Cash Available after Distribution ($/boe) $24.35
                                                                                                   2005 Proved Developed FDA ($/boe) ($14.34)
                    10                                                                             Excess Available Cash to Cycle            $10.01




                     5
            $/boe




                     0
                     PW U N




                     ER N
                     B N UN




                            UN
                     FE N
                     ZA N




                            UN
                     AE N




                     PW N




                     CP UN
                     EE N
                     VE N




                     PM N
                     SH N
                     HT N




                     AV N




                      TE N
                     PG O




                     PT N
                     FE N
                     PG N

                     BT N
                           UN




                            U
                            U




                            U




                            U
                          _U




                            U
                            U




                            U
                           U




                           U
                           U

                           U




                          _U
                           U




                          _U
                           U
                         YT

                        X_




                        T_
                        E_
                        R_




                        F_
                        E_




                         I_



                        T_
                        T_




                        T_
                        T_




                        F_




                        T_
                        N_
                        Y_

                        F_
                        P_




                        L_




                        E_
                       AE




                        G
                        N
                       PE




                     DA




                     -5



                    -10

Reserve Replacement Cycle – Funds from operations minus distributions and the cost to find, develop and acquire proven producing reserves                  37
BOE factor - 6 mcf = 1 bbl of oil equivalent                                                                                                          5/17/2006

								
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